Public Sports Stadium Financing Revisited

public_funding_for_stadiumsOne of the frustrating things about being a thinking adult is how many confusing shades-of-grey moral choices we face. The ethical clarity we enjoyed as a child or even as a ‘woke’ teenager seems to cloud over. Isn’t anything pure? How do I know what’s right or wrong? Why can’t things just be simple? Sigh. Adulthood.

On the other hand, it’s comforting to know that a few areas still provide us opportunities for PMCs, so-named by Paul Farmer as “Positions of Moral Clarity”(in a completely different context from the way I’m going to use the acronym).

Using public money to build sports stadiums represents, for me, one such PMC. My answer can always be summed up with just two words.1

I expended a few more words than that on a recent local news program, which helpfully picked up on a good Brookings Institution report summing up the public subsidy for private owners of sports teams nationwide.

The bulk of the subsidy calculated by Brookings is hard to explain in a television program, but essentially comes down to qualifying stadium-building bonds as tax-exempt municipal bonds, through a loophole in a 1986 law and in cooperation with local authorities, despite the clear fact that a stadium financially benefits the private ownership of a sports franchise. And there’s no measurable financial or economic benefit for the neighborhoods where the stadiums get built.

The lower interest rate of the tax-exemption amounts to $3.2 billion in private benefit since 2000. This is a more subtle form of subsidy via cheap financing than is employed by some state, county or municipal authorities to attract or retain professional sports franchises. Sometimes cities just promise to spent public money outright on shiny stadiums, as Las Vegas, Nevada appeared to promise yesterday to the soon-to-be-former-Oakland Raiders.

AAA_baseballI had previously expressed alarm at attempts to woo The Oakland Raiders to my city, but I had under-estimated the cost to the public at $500 million. It now looks like Las Vegas will commit $750 million to entice Mark Davis’ Raiders. I had also written about the terrible idea of building a stadium with public money to attract a AAA baseball team to my city, although the good news is that – for now – city leaders have backed away from that nonsense, for lack of interest.

Anyway, it’s nice to have a few areas, a few PMCs, in which I don’t worry that I’ve got it wrong.

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  1. Fuck. No.

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I founded Bankers Anonymous because, as a recovering banker, I believe that the gap between the financial world as I know it and the public discourse about finance is more than just a problem for a family trying to balance their checkbook, or politicians trying to score points over next year’s budget – it is a weakness of our civil society. For reals. It’s also really fun for me.

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